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U.S. v. AM. SOC. OF COMPOSERS
July 11, 1991
UNITED STATES OF AMERICA, PLAINTIFF,
AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, DEFENDANTS. IN THE MATTER OF THE APPLICATION OF TURNER BROADCASTING SYSTEM, INC., APPLICANT, FOR THE DETERMINATION OF REASONABLE LICENSE FEES. IN THE MATTER OF THE APPLICATIONS OF USA NETWORK, LIFETIME TELEVISION, THE DISCOVERY CHANNEL, THE CBN FAMILY CHANNEL, BLACK ENTERTAINMENT TELEVISION, INC., ARTS & ENTERTAINMENT CABLE NETWORK, THE DISNEY CHANNEL, HOME BOX OFFICE, INC., SHOWTIME NETWORKS INC., MTV NETWORKS, INC., OPRYLAND USA, INC., PLAYBOY VIDEO ENTERTAINMENT GROUP, INC., AMERICAN MOVIE CLASSICS COMPANY, SPORTSCHANNEL PRISM ASSOCIATES, BRAVO COMPANY AND COUNTRY MUSIC TELEVISION, INC., APPLICANTS, FOR LICENSES FOR THEIR CABLE PROGRAM SERVICES.
The opinion of the court was delivered by: Michael H. Dolinger, United States Magistrate Judge:
This proceeding is an outgrowth of certain provisions of a
Consent Decree (the "Decree") originally entered into in 1941
by the United States Department of Justice and the American
Society of Composers, Authors and Publishers ("ASCAP"). The
Decree, as amended in 1950, regulates the manner in which ASCAP
licenses for public performance the copyrighted music of its
The applicants in this proceeding all function as so-called
cable program suppliers. In brief, they each assemble a package
of programming, which they typically transmit to numerous cable
system operators. The system operators, which are licensed
locally to operate in specified geographic areas, in turn
transmit the programming over cable to the televisions of
residents within their locale who pay subscription fees to be
hooked up to the cable and receive the programming.
At present, the parties have presented to the court for
decision two questions that require interpretation of portions
of the Decree. The first is whether the Decree requires ASCAP
to issue a public performance license to the cable program
suppliers that covers not only the transmission of the
suppliers' programming to the local cable system operators, but
also the transmission of the programming by the system
operators to the viewers.*fn1 The second is whether the Decree
requires ASCAP to issue to the cable program suppliers, on
demand, a so-called per-program license as an alternative to
its more commonly used blanket license. For the reasons that
follow, I conclude that the Decree requires ASCAP to make both
of these licenses available to cable program suppliers.
The current proceeding was initiated by the Turner
Broadcasting System, Inc. ("TBS") on January 13, 1989. Although
styled as an application for the setting of fees under Article
IX(A) of the Decree, the petition principally sought a more
preliminary form of relief — an order that ASCAP make
available to TBS a performance license that covered the
transmission of all of its programming "through to the viewer."
Such a license — which ASCAP concedes it is required to issue
to the traditional "over the air" networks — is commonly
referred to as "licensing at the source," presumably because
the license is issued to the entity that is the source of the
programming. The applicants assert that the relief they seek is
necessary because ASCAP announced in 1988, for the first time,
that it would no longer agree to licensing at the source for
the cable program suppliers — including TBS's three cable
services, Cable News Network, Headline News, and Turner Network
Television — and would instead provide only a license that was
limited to the program suppliers' transmission of their
programming to local system operators; the license would
therefore not cover the transmission of the programs by the
system operators to the viewing public. In effect, ASCAP was
asserting a right to demand licenses from both the program
supplier and the system operator for the performance of ASCAP
music as part of the programming on cable television channels.
TBS's application was ultimately joined by 16 other entities,
all of which also supply programming to system operators for
transmission to cable viewers. All of these cable program
suppliers reported that they had been stymied in seeking a
license from ASCAP that would cover the public performance of
ASCAP music in programming distributed by them. In each
instance, ASCAP had advised the suppliers that it did not
believe itself bound to issue such a license to them, and that
it intended to obtain separate licenses from both the cable
program suppliers and the cable system operators.
ASCAP has moved for partial summary judgment, urging
dismissal of that portion of the cable program suppliers'
petitions that seeks an order compelling the issuance to them
of a license that would cover programming transmissions by the
system operators. ASCAP premises its motion on the contention
that Article V(A) of the Decree, which requires ASCAP to issue
such a license to "telecasting networks" for programming aired
by the stations "affiliated" with such networks, does not cover
cable program suppliers and their affiliated cable system
operators. The applicants have opposed the motion, and although
not formally cross-moving for summary judgment, have urged that
the court grant their requested relief on the current motion.
After the briefing and argument of ASCAP's motion, the
parties agreed to broaden the scope of this proceeding to
encompass another issue of decree interpretation. In the
previously filed Showtime/The Movie Channel Article IX(A)
proceeding, Showtime raised at trial the question of its
entitlement under the Decree to a so-called per-program license
from ASCAP. Ultimately, Showtime and ASCAP agreed to the
withdrawal of that claim from the Showtime proceeding, and its
resurrection in the current proceeding. Accordingly, the
parties have agreed to expand the scope of ASCAP's previously
filed summary judgment motion to encompass the question of
whether cable program suppliers are entitled, under Article
VII(B) of the Decree, to a per-program license as an
alternative to a blanket license.
In supplemental briefing, the applicants have argued that
they are "television broadcasters" within the meaning of
Article VII(B) of the Decree, and hence are entitled to such a
license. In response, ASCAP has pressed the argument that this
term applies only to over-the-air or traditional television
stations, and that accordingly it has no obligation to provide
a per-program license to the applicants.
With the consent of the parties, the court invited the
Department of Justice, as a cosigner of the Decree, to offer
its views on both issues. On each issue, the Department —
although not fully agreeing with ASCAP's interpretation of the
Decree or its legal analysis — has concluded that the Decree
does not obligate ASCAP to issue the types of licenses sought
by the applicants.
THE EVOLUTION OF THE CONSENT DECREE
ASCAP is a membership association consisting of approximately
40,000 composers and music publishers. American Society of
Composers, Authors and Publishers v. Showtime/The Movie
Channel, Inc., 912 F.2d 563, 573 (2d Cir. 1990) (reproducing
Memorandum and Order of the District Court). The members own
copyrights in more than three million musical compositions,
see, e.g., id., and have authorized the Society to grant
licenses for the public performance of those compositions.
In general terms, the 1941 Decree required that ASCAP's
members give the Society only a non-exclusive agency to issue
performance licenses, thus retaining for the members themselves
the right to negotiate directly for such licenses or to assign
that role to another person or entity. The Decree also
prohibited ASCAP from "discriminating in price or terms between
licensees similarly situated." Id., Art. II(2).
The Decree addressed in some detail the manner in which ASCAP
was to issue licenses for the performance of music by radio
broadcasters. Thus, it prohibited ASCAP from insisting on a
license fee for commercial radio programs that was predicated
in whole or part on the revenues received by the broadcaster
from programs that contained no music licensed by ASCAP.
Id., Art. II(3).*fn2 It also required ASCAP to issue to radio
broadcasters, on request, a per-program license, and to quote
fees for such a license that would not frustrate "the purpose
of this subparagraph to afford radio broadcasters alternative
bas[e]s of license compensation." Id.
The Decree further provided that ASCAP must issue licenses
for "network radio broadcasting" that would cover, for a single
license fee, "the simultaneous broadcasting of . . .
performance[s] by all stations on the network." Id., Art.
II(4). Thus, ASCAP was prohibited from "requiring separate
licenses for such several stations for such performance." Id.
Similarly, the Decree required ASCAP to issue to producers or
distributors of electronic transcriptions or other recordings a
license that covered the public performance of recordings
prepared for performance on any designated radio programs. In
such a circumstance ASCAP would be barred from seeking a
separate license from any radio stations designated by the
licensee for the performance of the recording. Id., Art. II(5).
The Decree contained additional limitations on ASCAP's
licensing practices, including a requirement that it issue
licenses on demand by "users other than broadcasters,"
id., Art. II(6), and that it issue to "radio broadcasters," if
so requested, "a license on a per performance or per program
basis." Id., Art. II(7). The Decree also prohibited ASCAP and
its members from withholding from performance any composition
in the ASCAP repertory for the purpose of extracting
"additional consideration." Id., Art. II(8).
The Decree also addressed a variety of internal ASCAP
matters, including membership eligibility, the election of its
Board of Directors, and the distribution of fees to the
members. Finally, it provided for monitoring by the Department
of Justice and continuing jurisdiction by this court.
Id., Arts. II(9), (10), (11); III, IV, VI.
The 1941 Decree was superseded in 1950 by a substantially
revised agreement between the Government and ASCAP. See United
States v. ASCAP, 1950-51 Trade Cas. (CCH) ¶ 62,595 (S.D.N Y
March 14, 1950). The amendment of the Decree was apparently
instigated by a number of related developments, two of which
are of particular pertinence in this case. First, during the
late 1940's, radio ceased to be the only broadcast medium
available to American households. Although still in its
infancy, television began to be recognized as a potentially
significant transmitter of programming to the American public.
It therefore became necessary to address the
manner in which its use of copyrighted music would be licensed
Second, in 1948 two federal courts were confronted with an
antitrust challenge to the manner in which ASCAP was licensing
the performance rights to copyrighted music incorporated in
motion pictures. The controversy focussed on ASCAP's practice
of granting movie producers solely the right to incorporate the
music on the soundtrack of the film — the so-called
synchronization right — while withholding the right to perform
the music publicly when the film was played in movie theatres.
Rather than granting both rights to the movie producers, ASCAP
insisted that each local film exhibitor separately obtain a
public performance license for the films played in its
The movie exhibitors challenged this practice, and in 1948
Judge Leibell in this court and Judge Nordbye in the District
of Minnesota both concluded that ASCAP's practice of splitting
the rights necessary to exhibit the films constituted a
violation of the Sherman Act. See Alden-Rochelle Inc. v. ASCAP,
80 F. Supp. 888, 893-95 (S.D.N.Y. 1948); M. Witmark & Sons v.
Jensen, 80 F. Supp. 843, 848-50 (D.Minn. 1948). In consequence,
Judge Leibell enjoined ASCAP from dealing with the film
exhibitors in the licensing of ASCAP music for public
performance in films. Alden Rochelle Inc. v. ASCAP, 80 F. Supp. 900,
903-05 (S.D.N.Y. 1948).
In the wake of these developments, the Justice Department and
ASCAP undertook negotiations to modify the 1941 Decree. See
generally Timberg, "The Antitrust Aspects of Merchandising
Modern Music: The ASCAP Consent Judgment of 1950", 19 J.Law &
Contemp.Probs. 294, 299-306 (1954). The final version of the
amended Decree was presented in March 1950 to Judge Goddard,
who had overseen the original 1941 Decree, and he approved
The 1950 Decree contains a number of significant changes from
its predecessor. The most prominent of these involve the
expansion of its terms to cover television, the incorporation
of provisions designed to address the issues raised in
Alden-Rochelle, and the creation of a so-called rate court,
with attendant terms governing the procedures for obtaining a
license and court determination of any disputes concerning
Under the terms of the 1950 Decree, ASCAP must issue a
license to "any user" who makes a written request for it, but
may not issue, except on written request, a license limited to
specific compositions in its repertoire. 1950 Decree, Art. VI.
The Decree also specifies certain licensing requirements for
specific types of users. Thus, in connection with motion
pictures, the Decree embodies the holding of
Alden-Rochelle and Witmark by requiring ASCAP to issue to the
movie producer, on demand, "a single license of motion picture
performance rights" for the entire United States, id., Art.
V(C), and barring ASCAP from negotiating with or collecting
money from "any motion picture theatre exhibitors" concerning
motion picture performance rights. Id., Art. IV(E).
As for the broadcast media, they are treated together with
wired music services, and the relevant provisions are those
centrally at issue in this case. Thus, Article V(A) represents
a modified version of the 1941 provision governing licensing at
Defendant ASCAP is hereby ordered and directed to
issue, upon request, licenses for rights of public
performance of compositions in the ASCAP repertory
The Decree also reincorporates the old "licensing at the
source" requirement with respect to manufacturers, producers
and distributors of recordings, and thus limits ASCAP to a
single license for recordings that are "recorded for
performance on specified commercially sponsored radio programs
or television programs . . ." In such a case, the license to
the manufacturer, producer or distributor is to cover the
broadcasting of the recording "by all radio stations or
television stations in the United States enumerated by the
licensee without requiring separate licenses for such
enumerated stations for such performance." Id., Art. V(B).
In a separate set of provisions addressed to the licensing of
public performance rights for "radio broadcasting and
telecasting," ASCAP is prohibited — as it was in the 1941
Decree in connection with radio broadcasting — from imposing
fees for commercial programming based upon a percentage of
income received by the licensee from programs with no ASCAP
music, unless requested by the licensee. Id., Art. VII(A).
ASCAP is also required to issue per-program licenses "to any
unlicensed radio or television broadcaster, upon written
request." Id., Art. VII(B). Under the terms of the Decree, the
fees for such a license for commercial programs may be based,
at the option of ASCAP, either on a fixed payment per program
or on a percentage of the revenues paid by the sponsors of the
program. Id., Art. VII(B)(1).*fn4
In provisions of more general applicability, the Decree
reiterates the requirements of its predecessor that ASCAP
receive from its members only a non-exclusive right to
negotiate for performance rights. Id., Art. IV(B). It also
contains two anti-discrimination provisions. One prohibits
ASCAP from entering into any license "which discriminates in
license fees or other terms and conditions between licensees
similarly situated." Id., Art. IV(C). The other directs ASCAP
"to use its best efforts to avoid any discrimination among the
respective fees fixed for the various types of licenses which
would deprive the licensees or prospective licensees of a
genuine choice from among such various types of licenses." Id.,
As noted, the Decree also establishes a set of procedures for
fee-setting. Article IX(A) requires ASCAP, on receipt of a
written license application, to advise the applicant in writing
"of the fee which it deems reasonable for the license
requested." If the parties cannot agree on a fee within sixty
days, the applicant may apply to the court for the setting of
"a reasonable fee." The Decree also provides that if the court
sets a fee, ASCAP must offer "a license at a comparable fee to
all other applicants similarly situated who shall thereafter
request a license." Id., Art. IX(C).
Finally, as with its predecessor, the 1950 Decree contains a
series of provisions governing the membership and management of
ASCAP, voting rights, distribution of fees, and other matters
relating to internal administration, as well as a provision for
the continuing jurisdiction of this court. Id., Arts. IV(E),
As for the per-program issue, ASCAP again rests its argument
principally on the notion that cable television is a new form
of mass communication. Accordingly, ASCAP urges that it was not
intended to be covered by the term "television broadcaster"
found in Article VII(B) of the Decree.
In resisting these arguments, the applicants suggest that the
differences between the manner of operation of the over-the-air
networks and the cable program suppliers are immaterial in view
of the purposes of the Decree, and particularly the purposes of
Articles V(A) and VII(B). They invoke the asserted functional
equivalence of the original television networks and the cable
program suppliers, and suggest as well that the Decree was
designed to be forward-looking and to encompass all forms into
which the television industry, which was still in its infancy
in 1950, might thereafter evolve.
Specifically with respect to the licensing-at-the-source
question, the applicants assert, as an alternative argument,
that even if the term "telecasting network" is narrowly
defined, they should nonetheless be entitled to the same form
of license as the Decree guarantees to the traditional
television networks based on the anti-discrimination provision
of Article IV(C). The applicants also invoke the language of
Article IX, which requires ASCAP to quote a fee on demand "for
the license requested." They contend that this language
entitles them, at a minimum, to any reasonable form of license
that they may request, even if it is not otherwise required by
Finally, on the question of the per-program license, the
applicants also cite the anti-discrimination provision of
Article VIII. Specifically, they argue that it underscores the
drafters' intention that all "licensees" be given "a genuine
choice" among the various types of licenses, including the
Before addressing these arguments, I briefly summarize the
legal standards that govern the resolution of these matters.
A. Standards for Summary Judgment
For ASCAP to prevail on its motion, it must satisfy the court
that there is no dispute as to any material fact and that,
based on the undisputed facts, it is entitled to judgment as a
matter of law. See, e.g., Montana v. First Federal Savings &
Loan Ass'n, 869 F.2d 100, 103 (2d Cir. 1989); Knight v. U.S.
Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied,
480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987); Falls Riverway
Realty, Inc. v. Niagara Falls, 754 F.2d 49, 54 (2d Cir. 1985).
It is axiomatic that the role of the court on such a motion "is
not to resolve disputed issues of fact but to assess whether
there are any factual issues to be tried, while resolving
ambiguities and drawing reasonable inferences against the
moving party." Knight v. U.S. Fire Ins. Co., 804 F.2d at 11;
Eastway Constr. Corp. v. New York, 762 F.2d 243, 249 (2d Cir.
1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d
226 (1987). See, e.g., Parsons v. Honeywell, Inc.,
929 F.2d 901, 904 (2d Cir. 1991); Branum v. Clark, 927 F.2d 698, 704 (2d
Cir. 1991); Twin Laboratories, Inc. v. Weider Health & Fitness,
900 F.2d 566, 568 (2d Cir. 1990); Montana v. First Fed. Sav. &
Loan Ass'n, 869 F.2d at 103; Ramseur v. Chase Manhattan Bank,
865 F.2d 460, 465 (2d Cir. 1989).
The movant bears the initial burden of informing the court of
the basis for its motion and identifying those portions of the
"pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any," that
demonstrate the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2552, 91 L.Ed.2d 265 (1986). Accord, e.g., Citizens Bank of
Clearwater v. Hunt, 927 F.2d 707,
710 (2d Cir. 1991). If the movant fails to meet its burden, the
motion must be denied even if the opposing party does not
submit any evidentiary matter to establish a genuine factual
issue for trial. Adickes v. S.H. Kress & Co., 398 U.S. 144,
160, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970).
If the movant carries its initial burden, the burden shifts
to the party opposing the motion to demonstrate a genuine
dispute as to one or more of the material facts. Celotex Corp.
v. Catrett, 477 U.S. at 322, 106 S.Ct. at 2552. See also
Citizens Bank of Clearwater v. Hunt, 927 F.2d at 710; Greater
Buffalo Press, Inc. v. Federal Reserve Bank of New York,
866 F.2d 38, 42 (2d Cir.), cert. denied, 490 U.S. 1107, 109 S.Ct.
3159, 104 L.Ed.2d 1022 (1989). In responding to the motion, the
opposing party cannot simply rely on its pleadings or on
conclusory factual allegations, or on conjecture as to the
facts that discovery might disclose. See, e.g., Gray v. Town of
Darien, 927 F.2d 69, 74 (2d Cir. 1991). Rather, the opposing
party must present specific evidence in support of its
contention that there is a genuine dispute as to the material
facts. See, e.g., Celotex Corp. v. Catrett, 477 U.S. at 324,
106 S.Ct. at 2553; Twin Laboratories v. Weider Health &
Fitness, 900 F.2d at 568; Montana v. First Fed. Sav. & Loan
Ass'n, 869 F.2d at 103; Knight v. U.S. Fire Ins. Co., 804 F.2d
at 12; L & L Started Pullets, Inc. v. Gourdine, 762 F.2d 1, 3-4
(2d Cir. 1985). To demonstrate a "genuine dispute," the
opposing party must come forward with enough evidence to
justify a reasonable jury returning a verdict in his favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 2510, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348,
1355, 89 L.Ed.2d 538 (1986); Citizens Bank of Clearwater v.
Hunt, 927 F.2d at 710; Cinema North Corp. v. Plaza at Latham
Associates, 867 F.2d 135, 138 (2d Cir. 1989).
B. The "Licensing at the Source" Claim
ASCAP argues that the Decree should be read as a contract;
that, so read, it unambiguously precludes cable program
suppliers from the protection of Article V(A) — which governs
radio broadcasting networks, telecasting networks and wired
music services — and that therefore summary judgment should be
granted in its favor on this portion of the applicants'
petition. As will be seen, I conclude that the language of
Article V(A) does not unambiguously support ASCAP's reading,
and that with the guidance of appropriate aids to construction,
it becomes apparent that in fact the applicants are covered by
Article V(A). In view of this conclusion, and the absence of
any disputed issues of material fact, the court will enter
summary judgment for the applicants on this claim.
1. Interpreting a Consent Decree
We start by noting that, in general terms, ASCAP is correct
in asserting that the courts will interpret decrees with the
same tools as are utilized in the construction of private
contracts. This follows from the fact that "[a] consent
judgment, though it is a judicial decree, is principally an
agreement between the parties." S.E.C. v. Levine,
881 F.2d 1165, 1178 (2d Cir. 1989). Accordingly, decrees are generally
to be interpreted consistently with their "plain meaning" or
"explicit language." See, e.g., United States v. Atlantic
Refining Co., 360 U.S. 19, 22-23, 79 S.Ct. 944, 946, 3 L.Ed.2d
1054 (1959); Suarez v. Ward, 896 F.2d 28, 30 (2d Cir. 1990);
Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985).
The point of this oft-cited observation, and of the frequent
admonition to read decrees within their "four corners", is that
the decree "represents a compromise between parties who have
waived their right to litigation and, in the interest of
avoiding the risk and expense of suit, have give[n] up
something they might have won had they proceeded with the
litigation. . . ." Berger v. Heckler, 771 F.2d at 1568 (quoting
United States v. Armour & Co., 402 U.S. 673, 681, 91 S.Ct.
1752, 1757, 29 L.Ed.2d 256 (1971)). Thus, we are warned that
"the scope of the decree must be discerned within its four
corners, and not by reference to what might satisfy the
of one of the parties to it." Fire-fighters Local Union No.
1784 v. Stotts, 467 U.S. 561, 574, 104 S.Ct. 2576, 2585, 81
L.Ed.2d 483 (1984). Accord, e.g., S.E.C. v. Levine, 881 F.2d at
1178-79; Berger v. Heckler, 771 F.2d at 1568. To do otherwise,
by ignoring plain language and meaning, would deprive one of
the parties to the decree of the benefits for which he
bargained and in exchange for which he "waived his right to
litigate the issues raised, a right guaranteed to him by the
Due Process Clause." United States v. Armour & Co., 402 U.S. at
682, 91 S.Ct. at 1757. Accord, e.g., S.E.C. v. Levine, 881 F.2d
Notwithstanding the stringency of these strictures, they
necessarily are limited to cases in which the relevant
provisions of the decree have a clear and unambiguous meaning.
If the language utilized has only one reasonable
interpretation, see generally Burger King Corp. v. Horn &
Hardart Co., 893 F.2d 525, 528 (2d Cir. 1990); Schering Corp.
v. Home Ins. Co., 712 F.2d 4, 9-10 (2d Cir. 1983), then the
court must look exclusively to the language found in the
decree. See United States v. Armour & Co., 402 U.S. at 680-83,
91 S.Ct. at 1756-58. If, however, the wording is susceptible to
more than one reasonable construction, then the court must look
to extrinsic evidence, as is the case with ambiguous contracts.
See, e.g., United States v. ITT Continental Baking Co.,
420 U.S. 223, 238, 95 S.Ct. 926, 935, 43 L.Ed.2d 148 (1975); S.E.C.
v. Levine, 881 F.2d at 1179; Schurr v. Austin Galleries
of Illinois, Inc., 719 F.2d 571, 575 (2d Cir. 1983). As noted
by the Supreme Court in ITT,
[s]uch aids include the circumstances surrounding
the formation of the consent order, any technical
meaning words used may have had to the parties,
and any other documents expressly incorporated in
420 U.S. at 238, 95 S.Ct. at 935.*fn5
The reference in ITT to "the circumstances surrounding the
formation of the consent order" encompasses not only
traditional parol evidence — that is, the representations made
by the negotiators to each other in the course of the
negotiations, see e.g., Roberts v. Consolidated Rail Corp.,
893 F.2d 21, 24 (2d Cir. 1989); Pantone, Inc. v. Esselte Letraset
Ltd., 691 F. Supp. 768, 774 (S.D.N.Y. 1988), aff'd, 878 F.2d 601
(2d Cir. 1989) — but also any meaningful indicia of the
purpose, if any, of the contested provision. This point was
made, somewhat elliptically, by the Supreme Court in ITT
when it took pains to distinguish its prior comment in United
States v. Armour & Co. that "the decree itself cannot be said
to have a purpose; rather the parties have purposes, generally
opposed to each other, and the resultant decree embodies as
much of those opposing purposes as the respective parties have
the bargaining power and skill to achieve." 402 U.S. at 681-82,
91 S.Ct. at 1757 (emphasis in original). As the Court noted in
ITT, this comment, and similar remarks found in United States
v. Atlantic Refining Co., 360 U.S. at 22-23, 79 S.Ct. at 946,
and Hughes v. United States, 342 U.S. 353, 356-57, 72 S.Ct.
306, 308, 96 L.Ed. 394 (1952), all were made only after the
Court had found the disputed decree language to be unambiguous.
Therefore, the Court in those cases was in effect simply
declining to change the parties' prior bargain to serve the
asserted policies of the statute under which the decree had
been entered. See 420 U.S. at 235-37, 95 S.Ct. at 933-35. The
obvious point is that if the defendant did not bargain for
unambiguous language precluding the competing interpretation,
the court is not limited in what data it may look to in
discerning the proper meaning of the decree, and in particular
it may look to equitable considerations that flow from the
statute underlying the decree and the fact that, in this
respect, the decree is a court order as well as a contract.
See, e.g., United States v. American Cyanamid Co.,
719 F.2d 558, 564 (2d Cir. 1983), cert. denied, 465 U.S. 1101, 104 S.Ct.
1596, 80 L.Ed.2d 127 (1984).
The Court in ITT further distinguished the three earlier
cases by noting that in each of them the Government was seeking
to punish past conduct by the defendant, whereas in ITT the
parties were seeking simply to define the parameters of
required future conduct by the defendant under the decree. Id.
420 U.S. at 237, 95 S.Ct. at 935. This point is of course
consistent with caselaw that has required that criminal
statutes and injunctions be sufficiently specific to guide the
defendant's conduct before he may be punished for
non-compliance. See, e.g., Kolender v. Lawson, 461 U.S. 352,
357-58, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983); Pasadena
City Bd. of Educ. v. Spangler, 427 U.S. 424, 438-39, 96 S.Ct.
2697, 2705-06, 49 L.Ed.2d 599 (1976).
These same two distinctions have since been echoed by the
Second Circuit, which has also emphasized that where the decree
language is ambiguous and all that is at issue is future
conduct, "a court of equity may, in construing the provision,
consider the purpose of the provision in the overall context of
the judgment at the time the judgment was entered." United
States v. American Cyanamid Co., 719 F.2d at 564. Accord, e.g.,
United States v. Western Elec. Co., 894 F.2d 1387, 1391-92
(D.C. Cir. 1990). See also ASCAP v. Showtime/The Movie Channel,
Inc., 912 F.2d at 570 (noting that "context" of 1950 Decree
reflects intent to "disinfect" ASCAP "as a potential
combination in restraint of trade. . . .") (quoting K-91, Inc.
v. Gershwin Publishing Corp., 372 F.2d 1, 4 (9th Cir. 1967),
cert. denied, 389 U.S. 1045, 88 S.Ct. 761, 19 L.Ed.2d 838
(1968)); cf. United States v. County of Nassau, 907 F.2d 397
(2d Cir. 1990) (per curiam) (affirming refusal to modify
decree, in part based on conclusion that change "would
undermine the purpose of the decree").
With an eye to these general standards, I turn to the
parties' respective interpretations of Article V(A).
2. Are the Applicants Covered by Article V(A)?
a. The Purpose and Context of Article V(A)
As noted, ASCAP presses the view that the coverage of the
terms "telecasting network" and "stations . . . affiliated with
such . . . television network" should be limited to the three
major over-the-air networks — ABC, CBS and NBC — all of which
were in existence when the Decree provision in question was
drafted and approved, and should certainly not extend to the
applicants. In advancing this conclusion, ASCAP seems to make
two slightly different, yet related, arguments. First, it
suggests that since cable television was not yet contemplated,
much less developed, by 1950, the drafters of the Decree could
not have intended to include it within the scope of Article
V(A). Second, ASCAP argues that in any event the method of
operation of the applicants is so different, both
technologically and financially, from the over-the-air
television networks that they belong to an entirely different
genus of mass media, and hence are not covered by the Decree.
We start our analysis of ASCAP's first argument by noting
that the relevant language of Article V(A) is ambiguous. The
Decree refers to "a . . . telecasting network," rather than,
for example, "one of the existing television networks" or "a
network that engages in telecasting by over-the-air broadcast,"
and it does not define or otherwise explain this term in any
respect. Although it is conceivable from the wording that the
drafters may have intended to cover only the then-existing
three networks, or only such entities as thereafter operated in
virtually the same technological and financial manner, that
reading is not compelled by the language used. An alternative
reading, which is at least equally plausible solely from the
face of the Decree, is that this provision was intended to
cover any entity that — like the then-existing networks —
assembled a unique package of television programming which it
supplied to a number of locally-based telecasters with which it
maintained a contractual relationship, and which in turn
transmitted that programming, under the program supplier's
name, to the televisions in its locality. So construed, the
Decree would cover the cable program suppliers.
As noted, the 1941 Decree, although imposing some
restrictions on ASCAP's licensing methods generally, embodied
specific limitations solely with respect to only one medium of
mass communication, the radio industry. Among the limitations
imposed on ASCAP in its dealings with radio broadcasters was
the requirement that it must issue licenses to the radio
networks that would encompass the performance of network
programming "by all stations on the network," and that it must
refrain from seeking a separate license from the local stations
for such programming. (1941 Decree at Art. (II)(4).)
Although the Decree does not explicitly state the reason for
the inclusion of this requirement, it is not difficult to
discern in context. ASCAP became a target of the Government
because of its potential ability to control a significant
portion of the market for music used in non-dramatic public
performances, whether on radio or in other settings. In the
context of a network-affiliate relationship, such potential
control could be very effectively exploited to extract
non-competitive fees by the simple expedient of demanding not
only a license from the network — which conceivably has some
bargaining power by virtue of its ability to control the choice
of music to be included in its network programming — but also
a separate license from each of the affiliated stations, which
lack this leverage since they do not control what music is
included in the network programming that they air. Indeed, the
Government's 1941 complaint alleged this precise form of abuse.
(See Complaint at pp. 7-8, 14-15, attached to USA Network
Memorandum in Opposition at Exh. F.) By limiting ASCAP to a
license with the radio networks themselves, Article II(4)
balanced the playing field to a degree and spared the local
stations from facing the unenviable choice of either paying
whatever ASCAP demanded or foregoing network programming.
This interpretation is given added support both from other
language in the 1941 Decree and from later history. Article
II(3) of the 1941 Decree required ASCAP to offer radio
broadcasters a per-program license on request on terms that
would not frustrate "the purpose of this subparagraph to afford
radio broadcasters alternative bas[e]s of license
compensation." This language explicitly confirms the obvious
— that the Decree was designed to limit ASCAP's ability, by
pooling copyrights for large amounts of music used in radio
broadcasting, to extract unreasonable fees for performance of
the music. The availability of per-program licenses, if
reasonably priced as compared to the alternative blanket
license, was one means of accomplishing this purpose, since it
gave the broadcaster the ability to minimize its fees either by
limiting the number of programs on which it played ASCAP music,
or possibly by seeking direct licensing from the composers,
see, e.g., Buffalo Broadcasting Co. v. ASCAP, 744 F.2d 917, 926
n. 7 (2d Cir. 1984), cert. denied, 469 U.S. 1211, 105 S.Ct.
1181, 84 L.Ed.2d 329 (1985), a possibility that was kept at
least theoretically alive by the additional requirement that
ASCAP members give the Society only a non-exclusive agency to
license their music. (1941 Decree at Art. II(1).) The stated
purpose of the per-program requirement thus accords fully with
our understanding of the purpose of the "licensing at the
It was apparently the holding of Alden-Rochelle and the
emergence of television as a new medium of mass communication,
as well as complaints to the Justice Department about the
adequacy of the 1941 Decree, that gave impetus to the 1950
amendments to the Decree. (March 13, 1950 Tr. at 2, 7-8,
annexed to ASCAP Memorandum). In this historical context, the
1950 Decree added provisions explicitly incorporating
Alden-Rochelle-type relief for the movie industry and extended
the specific protections of the 1941 Decree — including both
the requirement for one license to cover the public performance
of network programming and the availability of per-program
licenses to radio broadcasters — to all forms of mass
communication known at the time that might utilize significant
amounts of ASCAP music. This effort at inclusiveness is
apparent both from the face of the Decree and from the
contemporaneous representations of the negotiators.
As noted, the Decree addresses radio, motion pictures, wired
music and television, and it contains no language limiting its
application to defined segments of any of these industries.
Accordingly, on its face the Decree appears to apply to
television programming transmitted to the public irrespective
of the technology used to make the transmission. Furthermore,
the language of Article V(A) can most fairly be read to cover
not only any technology for transmission of television
programming into the home, but also any financial arrangement
between the original packager of programming identified with
the packager and the entity that transmits that packaged
programming to television viewers. The problem that Article
V(A) addresses is potentially found whenever programming is
packaged by an entity for transmission to the public by another
entity, and the solution adopted by the Decree rests on the
fact that the packager ...